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Supermarket chain Coles has awarded suppliers leading the way in sustainability in the latest edition of its annual supplier awards.

Coles has recognised 15 suppliers it says have done a commendable job in following their commitment to sustainability, community and health innovation.

Coles CEO Steven Cain congratulated the winners and praised their continued efforts to help feed the nation.

“At Coles, we’re grateful for our long-held partnerships with farmers, producers and suppliers which help drive our purpose to sustainably feed all Australians. It is heartening to see examples of remarkable resilience and passion from suppliers who have continued to achieve amazing feats, despite the challenges.”

“As part of Coles’ Sustainability Strategy, under the Together to Zero and Better Together focus areas, we are always looking for ways to advance us in our ambition to become Australia’s most sustainable supermarket.”

The following 15 companies have been honoured in the 2021 Coles Supplier of the Year Awards:

Mitolo Family Farms won the Coles Fresh Produce Supplier of the Year Award for its continued investment in innovation and sustainability reducing 60-tonne of plastic in packaging, water-saving projects. (Darren, John and Frank Mitolo from Mitolo Family Farms are pictured above).

Victoria and Riverina pork supplier Rivalea Australia won the Coles Meat Supplier of the Year Award for its collaborative innovation including the launch of the first-to-market ‘Female Pork’ range in Australia.

Manildra Group won the Coles Bakery, Deli and Seafood Supplier of the Year Award for its commitment and innovations to provide healthier bread lines to customers. 

PMFresh won the Coles Dairy, Freezer and Convenience Supplier of the Year Award for its customer-focused innovation and improved sustainability in product packaging and delivery of its convenient and healthy ready-to-eat salad kits and meals. 

H&H Asia won the Coles Own Brand Supplier of the Year Award for its work with Coles to remove single-use plastics in its picnic range. 

Mars Petcare won the Coles Sustainable Supplier of the Year Award for its initiatives to reduce agriculture and land-use-based emissions. 

Henkel, which supplies laundry and home-care products to Coles, won the Coles Non-Food Supplier of the Year Award.  Henkel removed plastic scoops in laundry powders and introduced a 100-per-cent recyclable tub for its Somat Auto Dishwashing capsules.

Nestle won the Coles Grocery Supplier of the Year Award for its range of new and unique coffee, pantry, confectionery and cereal products. 

Cleanaway won the Coles Service Champion of the Year Award for its leading role with Coles to reduce waste and support resource recovery. Cleanaway oversees 55,000 pick-ups of waste and recycling each month from stores and is supporting Coles to reach its goal of diverting 85-per-cent of waste from landfill by 2025.

Kimberly-Clark Australia won Supply Chain Supplier of the Year Award for their consistent supply of products including tissues and toilet paper.  

Carlton & United Breweries won the Coles Liquor Supplier of the Year Award for a range of initiatives including pack differentiation through eight-packs on iconic brands such as VB, Carlton Dry and Great Northern and reinvigorating heritage brands such as KB Lager.  

Coca-Cola Europacific Partners won the Coles Express Supplier of the Year Award for its exciting activations to inspire customers throughout the year including promotions for Easter, AFL season, Christmas and Movember which helped raised funds for men’s health.  

Procter and Gamble won E-commerce Supplier of the Year Award for its collaboration with Coles Online to improve and simplify the online shopping experience for customers.  

Mildura-based Australian Garlic Producers won the Coles Community Champion of the Year Award for its initiatives with the Warrabri Aboriginal community at Ali Curung in the Northern Territory. The company is developing a viable and sustainable garlic industry resulting in future employment opportunities for the community.

Muscle Nation won Coles Product Launch of the Year Award for the launch of its Custard Protein Bar range.  

“We’re getting a lot of pricing pressure coming at us from all angles,” Mr Crowe told the Herald and The Age, noting the rising costs of petrol as well as beef. “From all suppliers, I’ve not seen this sort of pricing pressure for over 10 years.”

As a result, the cost of some Grill’d products – which he said were priced at the premium at the end of the market – will increase when the chain adjusts its menu at the end of March.

Grill’d changes its menu roughly two to three times a year, with any price adjustments to be reflected in the updated menu. “We’re looking at late March and trying to finalise that pricing now,” Mr Crowe said.

As the price of meat hits a three-year high and beef prices expected to keep rising, the restaurant chain has converted two stores in Sydney (Crown Street) and Melbourne (Collingwood) into meatless restaurants. Both will serve a full menu of 23 plant-based options that almost mirror the traditional menu.

It’s the latest sign of the fast food industry turning its sights on the alternative meats space, with Mr Crowe saying the plant-based movement was “certainly not a fad, it’s a permanent trend.”

Mr Crowe admitted that the two “Impossibly Grill’d” venues would lose patronage from customers wanting traditional meat burgers. “We know and expect that we’re going to hurt our top line and our bottom line for these two restaurants.”

With plant-based burger sales rising from 5 per cent to north of 15 per cent at its restaurants, Mr Crowe said the business was prepared to back the taste and quality of the entirely meat-free menu, which will feature products from alternative meat makers – Impossible Food, Fable, and Plantein.

“If I blindfolded you and gave you the [Impossible] burger, I bet $100 that you couldn’t tell the difference between this, and beef.”

The alternative meat movement is shaping up to become a $189 billion global industry by 2029, according to Barclays analysts. While it’s hard to pin down the exact number of vegans globally, some statistics put this figure to around 79 million, though a 2019 study by the ABC found just 1 per cent of Australians identify as vegan.

Australian retail sales of plant-based meat rose by 46 per cent in the 2020 financial year, according to a report by Food Frontier. In the same period, the number of alternative meat products on supermarket shelves doubled.

While the demand is there, and growing, Mr Crowe believes the key differentiator will come down to taste and quality.

“Consumers will try and be served a deficient product, and then reject it on that basis,” he said. “That’s the hard part, and we think we’ve cracked that nut … But if you can do plant-based and taste, then there’s a longer-term win.”

Fast food players have long taken steps into the plant-based space. Hungry Jacks introduced its vegan Rebel Whopper in late 2019, which features v2food patties made from vegetables. Grill’d rival Betty’s Burgers, which already features two non-meat options on its menu, signalled it was introducing more plant-based options in coming months.

The trend isn’t only found in fast food: celebrity fine dining chef Neil Perry’s latest venture, Margaret, includes v2food products on its menu.

Sustainability is the key driving force behind the rising interest in meat-free ‘meat’ and evolving consumer intentions to make more environmentally conscious choices. A US study recently found that producing a single kilogram of beef creates 70 kilograms of emissions. Global meat production creates twice the amount of pollution than plant-based food production (57 per cent compared to 29 per cent).

About 80 per cent of the world’s agricultural land is dedicated to feeding livestock – not humans.

“The reason you see stories of the Amazon being half the size that it is now is because we’re growing more feedstock,” v2food founder and CEO Nick Hazell told this masthead.

“If you’re worried about your carbon footprint … switch to plant-based meat.”

Australia’s meat industry needn’t be worried, he added; the production of lamb and mutton is expected to rise by 8 per cent in 2021-22 and beef by nearly 4 per cent, according to Department of Agriculture figures.

But it’s not just the actual production of food that strains the environment; all the peripheries, such as fertiliser, petrol, packaging, and more, also add to emissions.

“You don’t think of the amount of input that goes into farming,” said Mr Hazell, who has done stints at Mars and PepsiCo.

“You discover the fertiliser is bigger than the gas, which is bigger than logistics … and you were worried about the packaging.”

For Mr Crowe, the conversion of the two plant based-only stores is also a deliberate exercise of positioning its brand as more sustainable and ‘cleaner’ than the burger chain’s competitors.

“I couldn’t work at McDonald’s and feel proud of what they stand for, what that represents,” he said.

Infant formula maker Bubs Australia has recorded strong growth in its second quarter.

Quarterly gross revenue was recorded at $19.9 million with sales up 8 per cent quarter on quarter and by 56 per cent year on year. The company said infant formula revenue across all markets was up 83 per cent over the prior corresponding period. 

Among domestic retailers, gross revenue of its branded products was up 9 per cent year on year and 17 per cent quarter on quarter. 

As for international revenue (excluding China), Bubs’ products recorded 66 per cent growth on the prior corresponding period with quarter-on-quarter sales up 141 per cent.

Bubs Infant Formula drove sales up 272 per cent compared to the prior corresponding period with demand higher than pre-pandemic levels. Higher growth momentum in the corporate daigou channel saw sales up by 196 per cent against a year earlier.

Bubs founder and CEO Kristy Carr said the strong performance highlighted a pattern of growth momentum across all key markets and product groups.

“Bubs Infant Formula remains our hero product line and lead margin driver, up 83 per cent on the prior year, accounting for nearly two-thirds of revenues.

“On the home front, sales revenue of branded products increased 17 per cent quarter on quarter. Despite the subdued market, Bubs Infant Formula grew in both absolute terms and in market share with scan sales growth of 31 per cent in Coles, Woolworths and Chemist Warehouse consolidating its strong market share position to remain the fastest-growing infant formula manufacturer,” she said.

As for the China facing business side, the company has responded to the impact of the pandemic by realigning their China sales channels to execute the ‘Bubs Daigou 2.0’ strategy which worked in its favour. 

“Working alongside our strategic channel partner, AZ Global, we focused on enhancing channel engagement and campaign activation, whilst maintaining stabilised pricing and balanced fresh inventory levels. This channel partnership has resulted in very strong daigou demand for both Bubs Goat and Organic Grass-fed infant formula products (nearly quadrupling revenues over the previous corresponding period), as well as CapriLac adult milk powder (nearly doubling revenue on the previous corresponding period).”

Having worked for companies such as Kellogg’s and Nestle, Chelsea Ford realised that women are underrepresented in the food and drink industry, especially at management level, and others struggle to support themselves. Chelsea started her business Females in Food as a network for women within the sector to connect, share and create. Chelsea is launching a podcast this week that will empower women to be successful in what is a very competitive industry.

IFMCG: Please encapsulate briefly what Females in Food is all about.

CF: Right now women are starting food and drink businesses at a staggering rate. A large number are choosing to follow their foodie passions, while others are innovating new products that solve problems ‘unique’ to them.

The stats are creeping up, but there is an alarming trend emerging: globally, women are contributing larger numbers of new businesses, but are not taking home more of the profit.

So, I’m changing that with what I offer at Females in Food®, specifically with my coaching program, Foodpreneurs Formula®. I’m helping women foodpreneurs who are looking to break through the profit barrier to overcome their business blockages and take their brands to new heights.

IFMCG: What is the biggest challenge foodpreneurs face in their start-up phase?

CF: The biggest challenge foodpreneurs face is not knowing how to differentiate between creating a hobby and growing a business. And the challenges change as the foodpreneur is in the market longer. At launch, the challenges are part logistical, part sales. At this stage foodpreneurs can be very dreamy about their future prospects.

As the business matures, the foodpreneur begins to get momentum and then the real challenges begin. I’m referring to foodpreneurs who are making more than $5000 per month in revenue. These foodpreneurs face three primary obstacles; how to sell into wholesale accounts; whether or not they should find distribution partners; and how to sell to consumers that are not like them. Access to capital underpins the pace in which the foodpreneur moves at now so it too is relevant.

IFMCG: And how should foodpreneurs strategise to overcome this challenge?

CF: To help foodpreneurs compartmentalise and overcome the challenges at each of their growth stages, I named the stages commercialise, activate and breakthrough.

Those foodpreneurs at the positive mindset stage I mentioned above are generally pre-commercialisation, or just hitting that stage. It’s at this stage where she needs to be thinking about how much revenue she is turning over and how to manage the difficult balance of product creation and making sales to sustain an income stream to pay herself and the bills.

For foodpreneurs at a more mature stage wanting to sell into wholesale accounts she must generate consistent demand. A starting point here requires foodpreneurs to have their sales kit organised.  For a foodpreneur at this stage the services of a distributor may be required. So the key question to weigh up is, am I willing to share my margin in exchange for winning new accounts further afield.

Lastly, and briefly, 41 per cent of women led food and drink businesses begin so they can solve a problem that is personal to them. Such as their own gluten intolerance or their child’s nut allergies. This means foodpreneurs easily recognise consumers that have similar problems to them. Where the wheels begin to fall off is when the foodpreneur wants to sell via a wholesale channel and they don’t know how to transition their direct to consumer tactics to indirect marketing to their consumers.

IFMCG: Technology is such an important part of running a business today but isn’t necessarily a strong point for many small-business owners – how would you advise foodpreneurs to “demystify” tech and embrace it?

CF: There is a lot of opportunity for foodpreneurs to simply embrace technology so they reduce their time on the tools and free themselves up to spend more time on sales and marketing. Two applications I recommend that have free versions are:

1. Zoom: for video and audio conferencing. Foodpreneurs could use Zoom to conduct their online pitch presentations – regardless of where their buyer is located. This would help them gain representation further afield and overcome the current travel restrictions. I use Zoom to conduct all my live coaching sessions to make sure my members get the most out of the Foodpreneurs Formula® program no matter where they are in the world.
2. Upwork Global: a platform for connecting businesses with freelancers. Foodpreneurs with budget concerns could browse this application for no fee and source affordable talent easily. Upwork Global enables me to work with experienced freelancers from anywhere in the world.

IFMCG: You’re about to launch a podcast to help foodpreneurs formulate and realise strategies to succeed in the industry – what are the key points you’ll be covering?

CF: I’m really excited about my new podcast, Foodpreneur with Chelsea Ford. I’m helping packaged food and drink brand owners know how to negotiate with buyers; know how to get stocked; and how to get into more consumers’ hands so they make more profit to reinvest in their business and pay themselves a great wage.

The boss of Brisbane Airport says Australia is losing a race to reconnect with the world and faces a tougher tourism industry recovery because airlines are dedicating capacity to countries that have already reopened their borders.

Gert-Jan de Graaff, chief executive of country’s third-busiest airport, hopes domestic air travel will return to pre-COVID levels at some point in 2022, after two gruelling years in which the pandemic brought the industry to a standstill.

But in a dire forecast for the Sunshine State’s $28 billion a year tourism industry, he believes it will take three to five years for international traffic into Brisbane to fully recover.

“Airlines have reduced their fleets and crew, so they have to rebuild that... [and] here in Australia we’re competing with the whole world,” he said.

“Most other countries are already open, so the airlines have already allocated some capacity and aircraft to those other markets. We’re one-nil behind.”

Currently, only Australian residents, citizens of Singapore, South Korea, Japan and New Zealand, and a small number of visa holders can fly freely into Australia. Mr De Graaff said we can, and should, join much of the rest of the world and reopen to all vaccinated and tested visitors in the coming weeks.

“We’re past the [omicron] peak here in Australia, and we still have the requirement for people to be vaccinated and have a negative test. I don’t think there’s a lot of additional risk,” he said.

Prime Minister Scott Morrison said on Friday that he would like to fully open the international border “soon” and “certainly before Easter”.

Almost 24 million passengers passed through Brisbane Airport’s gates in 2019, with a quarter on international flights. That plummeted to just 7.8 million last financial year. Still, that made it the country’s busiest airport as Queensland escaped the long lockdowns enforced in Sydney and Melbourne.

“The first year was all about crisis management,” said Mr de Graaff, who was appointed CEO in 2018 after a 23-year career in aviation that started in Amsterdam and has taken the Dutchman to Stockholm, Rio de Janeiro and New York’s John F. Kennedy Airport. “The last six months we’re sort of in a holding pattern, but it’s good to see there’s light at the end of the tunnel now.”

The privately owned airport eked out a $5.4 million after-tax profit from $447 million in revenue last year, compared to a $275 million profit from $840 million in revenue in 2019, its annual reports show.

While financially bruising, the pandemic has not dented long-term investors’ appetite for airport assets. Shareholders in the ASX-listed Sydney Airport will vote this Thursday on a $23.6 billion take over from a consortium of investors including the Australian superannuation fund-backed IFM Investors.

IFM already owns one-fifth of Melbourne Airport and 20 per cent of Brisbane, alongside the Queensland Investment Corporation, the Royal Schiphol Group, which owns Amsterdam Airport, and the global asset managers First Sentier and Whitehelm Capital.

Queensland opened for quarantine-free international travel for select travellers last Saturday. Mr De Graaff said Brisbane - a vital entry point for international visitors destined for tourism hotspots around Queensland - would find it harder to attract airline traffic after opening more than two months behind Sydney and Melbourne.

“That’s why it’s really important that there will be a level playing field when it comes to, for example, campaigns from Tourism Australia,” he said.

The airlines and visitors flying to Brisbane Airport, and to Australia, will also change after the pandemic. Many carriers are still on the ropes financially and at risk of collapse or, at the least, will need to reassess their networks.

China was the biggest source of inbound visitors to Australia in 2019 and the soured political relationship between the two countries puts a question mark over whether that will ever return, Mr de Graaff said.

However, he said there are opportunities to grow new markets, though. Traffic was booming from Japan and North America before the pandemic and India and South East Asia are ripe for growth.

“For a lot of those destinations we are the perfect gateway into Australia - we’ve got capacity, we’ve got a new runway, we’ve got the capacity to connect those flights,” he said.

”Just based on the geography … a lot of airlines had an interest to develop Brisbane into a sort of hub.“

New smaller-capacity, long-haul aircraft like the Boeing 787 had been a game-changer for Brisbane in the few years leading up to the pandemic, making it viable for airlines to add the city to their networks. Mr De Graaff said the next generation of single-aisle jets with extended flight range, like the Airbus A320neo, will connect the airport to even more destinations throughout Asia.

Brisbane opened a second, parallel runway in July 2020 preparing for a forecast doubling of passengers from 24 million to 50 million over the next two decades.

The Omicron wave has shown just how volatile the travel industry is, prompting widespread cancellations and airlines reducing capacity following an encouraging lead up to Christmas.

Mr De Graaff predicts a period of cheap domestic airfares as airlines “do whatever’s necessary” to fill seats in the pandemic’s wake. New competition from Rex Airlines on the lucrative Sydney-Melbourne-Brisbane triangle and the arrival of new challenger Bonza will also drive fares lower.

Beyond the immediate concerns of COVID-19, the airport is preparing to build a third terminal by the end of the decade - just time for the 2032 Brisbane Olympics.

The impact of that event for the city - and by extension its airport - will be immense.

“I lived in Europe for the most part of my life and North America, and there’s still a lot of people that have never heard of Brisbane,” Mr de Graaff said.

“We’ve got a runway of 10 years to sell and position Brisbane as a top destination and top place to visit. This will put us on the map.”

The coronavirus pandemic has brought online grocery — a promising but formerly niche industry — to the fore. The combination of consumers’ interest in avoiding public places, government orders to stay at home, and the continued need for groceries and essential goods has made online grocery delivery services from the likes of Walmart, Amazon, Target, and Instacart indispensable.

Previously, some consumers resisted the shopping method because they wanted to pick out their groceries themselves and avoid extra fees, but the pandemic has forced many to change their priorities. And the sudden focus on online grocery is set to alter consumer behavior well after the pandemic subsides, accelerating the industry’s penetration in the US.

How well online grocers meet demand during the pandemic will play a major role in determining the top online grocers after the pandemic abates. Grocers’ ability to fulfill as many orders as possible in a variety of convenient channels throughout the pandemic will be important, as consumers may turn to different providers if they can’t place an order from one grocer through the channel they want — an issue that’s popped up in some markets for several grocers during the crisis.

But online grocers that can keep customers throughout the pandemic may be able to keep those shoppers for the foreseeable future: 75% of online grocery shoppers still shopped with their first-ever online provider, per a survey from Bain and Google from 2018. So, the grocers that meet the most consumers’ needs during the pandemic will likely lead the industry even after it subsides.

In The Online Grocery Report, Business Insider Intelligence first looks back at how online grocery adoption was progressing prior to the coronavirus pandemic to understand the state of the industry before the shopping method became vital to many consumers. Next, we examine why the pandemic is popularizing online grocery services and the impact it’s already having on adoption. We then forecast how online grocery’s penetration will grow in the coming quarters and years due to the pandemic, and consider the factors that will determine the industry’s staying power. Finally, we analyze top online grocery players’ ability to meet surging demand during the pandemic and how that positions them to build customer bases that can last well beyond the pandemic. 

The companies mentioned in this report are: Albertsons, Aldi, Amazon, BJ’s Wholesale Club, Costco, FreshDirect, Grubhub, Hannaford, H-E-B, Instacart, Kroger, Ocado, Peapod, Publix, Target, Uber Eats, Walgreens, Walmart, and Whole Foods.

Here are some key takeaways from the report:

• The coronavirus pandemic is pushing consumers to buy essential products digitally, which is rapidly accelerating adoption of online grocery services in the US.
• Online grocery’s staying power will come down to the length of the pandemic — because if the crisis stretches on, more consumers may be pushed to try an online grocery service — and how well online grocers meet surging demand, because consumers may abandon online grocery if they find it difficult to receive orders.
• The online grocery services that are best able to handle surging order volume will likely be the most popular services after the pandemic subsides because consumers will be able to rely on those services to consistently bring them groceries.
• Walmart and Instacart are best positioned to lead the pack post-pandemic given Walmart’s massive brick-and-mortar network and Instacart’s wide reach thanks to its platform model.

In full, the report:

• Examines the US online grocery industry prior to the coronavirus pandemic to highlight what was driving the industry’s adoption, and what obstacles it faced.
• Analyzes why the realities of the pandemic — such as concerns about contracting the virus — have pushed many consumers to try an online grocery service for the first time.
• Forecasts the US online grocery industry’s penetration in 2020 and in the years to come, laying out a moderate and extreme scenario to account for the uncertainty surrounding the recovery from the pandemic.
• Discusses why the duration of the pandemic and online grocers’ ability to meet demand will determine the popularity of online grocery after the pandemic subsides.
• Highlights how Walmart, Amazon, Target, and Instacart are positioned in the online grocery industry, how well they’re meeting demand during the pandemic, and how they are expected to fare in the space beyond the pandemic.
• Recommends how online grocers can maximize their performances during and after the pandemic with innovations like automation, operational flexibility, and bundling services.

Former CEO and MD of The Reject Shop, Ross Sudano, has been appointed as the new CEO of Tahbilk Group, the first person outside the family to hold the role. 

Sudano will succeed incumbent, fourth-generation Alister Purbrick, who will retire this June. 

“After 43 years running my family businesses, Tahbilk and the Tahbilk Group, it’s time for me to pass the baton on,” said Purbrick. 

As the new CEO of Victoria’s oldest family-owned winery, Sudano will report to the board and oversee the group’s operations based in the Nagambie Lakes region of Victoria. He will also be based at Tahbilk’s corporate office in Melbourne. 

Prior to Tahbilk, Sudano held several CEO positions across a range of industries, including at BP Australia and Foodland Associated Limited. In his recent role as CEO and MD of The Reject Shop, Sudano oversaw a strategic realignment, and successes included reducing the cost of business over his five-year tenure, generating $24 million per annum in savings alone. 

“We are certain that his extensive and proven business acumen and leadership skills will build on the successes achieved over 162 years of operation.”

Australia Post has revealed it delivered 52 million parcels through the December peak period as more Aussies shopped online for their Christmas presents. 

According to the national post carrier, more than 5.6 million households shopped online in the lead-up to Christmas Day, with volumes in October and November higher than in previous years. 

Utilising air freight, Australia Post had 25 carriers hitting the skies each night, flying 8.7 million kilos of parcels across the country in December – a 13% lift on the year prior. 

Meanwhile, on the busiest day in December, Australia Post moved 556 tonnes of parcels. 

Australia Post Group CEO and MD Paul Graham thanked the staff for their efforts over the peak period. 

"That we have seen another 52 million parcels delivered at Christmas demonstrates the dedication of the people in our Post Offices, our Licensed Post Office Partners, and everyone working across our processing, delivery, customer teams including more than 5000 new team members who helped make it possible.

"We thank Australians for their patience and support during these challenging times, and with so many customers heeding our call to shop and send early we saw a really big November for both deliveries and online shopping ahead of our traditional December peak," he said. 

It wasn't just eCommerce deliveries that experienced high volumes in December, with Post Offices and PO Boxes also witnessing strong lifts in the month. 

According to the carrier, more than 20 million customers visited Post Offices to send cards and gifts and collect packages, including more than 3.9 million from PO Boxes.

Further, more than 475,000 items were also collected from Australia Post’s free parcel lockers around the country during December, the most ever in a month.

However, while many Aussies were busy preparing for festive celebrations, it seems concerns over the pandemic were still lurking in the back of people's minds, with the online purchase of pharmacy items up more than 9% on the previous month. 

Other top online buys included books (up more than 22%) and specialty food (up more than 5%). 

To manage the pre-Christmas and Christmas demand, Australia Post bulked up its operations in November, introducing 45 new and repurposed operational and retail sites, getting additional planes in the air, welcoming over 4000 new team members and delivering on weekends. 

Wine industry executives and experts are expecting an acceleration in the number of buyouts in the sector as the destruction of Australia’s export market to China fully washes through and the omicron wave causes a renewed downturn at hospitality venues.

Smaller high-end wine companies with prestige brands will be in the sights of bigger players with strong balance sheets.

Mitchell Taylor, chief executive of Taylors Wines – one of Australia’s largest privately owned wine groups – said he was on the lookout for potential purchases and that merger and acquisition activity would probably rise.

“I’m predicting there will be more activity over the next 12 to 18 months,” he said. “We’re looking around at the moment for some bolt-ons to take advantage of synergies”.

Australian wine exporters sold about $1.3 billion worth of wine a year to China before hefty tariffs were imposed in November 2020, as Beijing’s political squabble with Australia worsened. Penfolds owner Treasury Wines was hit with a tariff of 175.6 per cent on its exports, and two thirds of Australian producers have simply given up on selling to China.

Taylors Wines is based in South Australia’s Clare Valley. Mr Taylor said companies across the industry were chasing distribution synergies.

He said the quality of assets in the Australian wine industry was high, but there were probably too many single operators. “There will be some amalgamations,” he said.

Re-directing exports away from China took a long time, and it was painstaking to rebuild new channels into other countries.

“There’s no magic powder out there that can make it happen overnight,” Mr Taylor said.

About 15 per cent of Taylors Wines exports had been going to China.

On Monday, the owner of Seppeltsfield Estate, Warren Randall, announced his Randall Wine Group had acquired Penny’s Hill winery in the McLaren Vale region south of Adelaide, as part of a strategic overhaul to gradually offset the sharp reduction in exports to China.

Randall Wine Group had built its previous 10-year strategy on about half of its exports going to China. The Penny’s Hill range sells at a price point of between $25 to $65 a bottle.

Industry buyouts

Bruce Tyrrell, the managing director of Tyrrell’s Wines, based in the Hunter Valley in NSW, said the premium end of the market would be at the centre of the buyout action.

Mr Tyrrell said consumers were willing to pay for prestige wines, and cashed-up companies were chasing wineries with high-growth prospects in that segment. “There’s money coming out of everywhere to buy things,” he said.

Tyrrell’s Wines shifted itself further upmarket more than a decade ago. Mr Tyrrell said drinkers were prepared to pay more than $100 for a bottle, and then wanted to be seen conspicuously drinking it on their social media feeds.

“There are people out there with obscene amounts of money to spend,” he said.

His bellwether each day was looking at the winery’s cellar door carpark. He said it was regularly full of BMW, Mercedes-Benz and Audi drivers, compared to a few years ago when there were more “Mazda-type” vehicles.

KPMG’s national wine advisory lead Tim Mableson said tougher conditions also brought opportunities. “I expect the wine industry to become more of a focus for investment in 2022 as the sector restructures to address market diversification, oversupply particularly in the red wine category, and predicted falling asset values,” he said.

“Larger wine businesses especially will be seeking to capitalise and expand their holdings of vineyards to control supply,” Mr Mableson said. “Established brands with market presence that fit marketing or growth gaps in their portfolios will be highly sought after”.

Eroding sales

Mr Mableson said even though online sales volumes had risen as consumers spent more time at home, and the hospitality industry was hit hard by restrictions, the average value of those sales had been eroded. Most wineries had adapted their business models to suit the disrupted conditions and began to focus “more on profitable direct-to-consumer channels that are not necessarily online” – centred on their cellar door operations.

MST Marquee analyst Craig Woolford said there would probably be a rise in buyouts globally, particularly for smaller premium brands.

“The trend towards $10-plus wines continues globally, and larger wine companies will want to bolt-on smaller premium brands and leverage their distribution reach,” Mr Woolford said.

• Supermarkets have started re-introducing purchase limits as RAT shortages turn the screw on Australian supply chains.
• Coles has introduced two-pack limits on mince meat and chicken, while Woolworths is monitoring the situation.
• TWU national secretary Michael Kaine said on Wednesday that Australian supply chains would continue to buckle without free access to RATs.

Australian supply chains are starting to hobble as a nationwide shortage of rapid antigen tests has led to sparsely populated supermarket shelves. 

Some supermarkets have re-introduced purchase limits on select items to manage patchy supply, as transport workers like truck drivers and port workers are forced off the job with COVID-19. 

Coles took swift action this week with the introduction of a two-pack limit on mince meat, chicken breast and thigh, as well as sausages, on top of the one-pack purchase limit the chain already had in place for rapid antigen tests. 

A spokesperson for Coles told Business Insider Australia surging Omicron case numbers have struck a blow to supply chains already fractured by shipping pallet shortages and a reduction in transport capacity.

“This has led to disruptions in deliveries from our suppliers, which in turn has resulted in product outages across all departments in our stores,” they said. 

“While we are working with our suppliers to improve availability, we expect it will be several weeks before we are able to fully recover,” they said.

“We have also seen an increased number of our own team being required to isolate, and we continue to monitor team member availability across our business.”

Shoppers at local and major supermarkets across New South Wales and Victoria have in some cases been faced with empty shelves, just days after the Transport Workers Union warned the cost and scarcity of rapid antigen tests could unleash chaos on supply chains.

TWU national secretary Michael Kaine told Business Insider Australia on Wednesday that Australian supply chains would continue to buckle unless Prime Minister Scott Morrison moved to make rapid antigen tests freely and widely available. 

“Supply chains are starting to grind to a halt because of the virus. Now, these RATs are needed to clearly manage the spread of the virus because we need transport supply chains to be safe,” he said. 

“And for so long as free and readily available testing isn’t there, then we’re going to continue to maximise the spread of the virus.”

Earlier this week, the Australian Meat Industry Council called on state and federal governments to make immediate changes to current policy settings as the industry faces an “unpredictable wave of staffing unpredictability”. 

“As COVID spreads in the community, our industry workers are unable to present for work for at least seven days should someone in their family or household test positive, under the current national COVID protocol,” said AMIC CEO Patrick Hutchinson.

“The Australian meat industry needs assurance that it can continue to operate via access to Public Health Order exemptions for those that are asymptomatic close contacts, access to free or low-cost RATs, and prioritised PCR testing and turnarounds, so that we can keep on feeding the people,” he said. 

“We don’t want to see a return of the early 2020 situation, with widespread supply shortages exacerbated by panic buying.”   

At Woolworths, supply chain distress has so far been limited to the retail giant’s stores in NSW, where delivery delays are impacting some products at certain times throughout the day. 

A spokesperson for Woolworths told Business Insider Australia that it won’t move to impose purchase limits just yet, as customers continue to shop without panic. 

“Our customers have been shopping in reasonable quantities and are only buying what they need, so we don’t believe product limits are needed at this stage,” they said. “We will continue to closely monitor product availability across our stores.”

“While we are experiencing some delays with stock deliveries to our stores due to COVID-19 impacts across the supply chain, deliveries continue to arrive daily,” they said.

“Stores may have reduced availability of some products at points throughout the day before they receive their next delivery, however we’re continuing to restock our shelves as often as possible.”

Woolworths chief executive Brad Banducci on Friday added that the surge in Omicron cases had in recent days taken about one in five of the retailer’s distribution workforce off the job.

“To give you a sense of the magnitude of the challenge, we are experiencing Covid-driven absences of 20%+ in our distribution centres and 10%+ in our stores,” Banducci said.

“NSW is currently the most affected, although we are seeing impacts across the whole country, and it’s not yet clear how soon the system will come back into balance as we move through the Omicron wave.”